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tv   Squawk on the Street  CNBC  November 27, 2012 9:00am-12:00pm EST

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new york city government grew and added employees. that's the wrong way. we have to have private sector growing. the government reducing the number of employees. >> all right. >> gentlemen, thank you for being here today. it's been a pleasure. ed, don, we'll have you both back soon. that does it for us today. join us tomorrow. right now it's time for "squawk on the street." good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber live at the new york stock exchange. melissa is off. the latest s&p case-shiller report has been released. results at the bottom of your screen. we'll go inside those numbers in about 15 minutes from now. futures here marking sometime ahead of data later this morning. we have a mild rally in europe after the greek bailout deal does get done after the third round of talks right now it looks like london and paris are in the green as is frankfurt.
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our road map starts in omaha where conagra is buying ralcorp. a deal worth 6.8 billion including debt makes it the largest private label food manufacturer. has it lit a fire under m & a? >> don't come in with a negative attitude when i'm positive. >> we want to talk about the wave of special dividends. it continues. this time las vegas sands and dillard's, nearly 60 payments pulling payments forward ahead of tax changes next year. the question is who's next? >> greece gets the bailout payment as the eu and imf agree on terms of debt sustainability. where does it leave the greek economy which has already shrunk by nearly a fifth? and warren buffett on tv this morning saying he wouldn't sell a single share of stock even if he was guaranteed the u.s. goes off the fiscal cliff. just wait until you hear who he thinks should be the treasury
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secretary. >> we'll begin of course with the deal of the day. conagra foods has agreed to acquire ralcorp for $5 billion. $90 a share in cash. 28% premium to the closing price on monday. kayla tausche reported on potential for a deal between the two companies back in 2011. it creates the largest private label food company in north america. this is a big deal. >> yes, it is. it's big in size in terms of what we've seen in this market. look how excited he is. and they finally got it done. it's been one as you pointed out that was around in 2011. they couldn't get it done. that is conagra. they walked away. ralcorp stock price fell dramatically. they split the post cereal division from ralcorp. the two trade separately.
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so you did have a company here that perhaps became a little more -- i wouldn't say vulnerable. not as if they were committed to selling. the board composition changed. you have had activist shareholder get on there. that was very quick. october 2nd. they filed a deed not long before that. this board from what i hear and the management said, all right, let's try and get something done with conagra. the last month they've been able to do that. the price perhaps came down a bit. the ask came down a bit to get a deal done at the $90 a share level. >> i think it's important to point out that conagra is up in premarket trading. >> guidance unchanged. >> an amazing phenomenon that c confounded me. the stock -- your stock has gone up more than it's gone down. what i love is that he actually
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blew away numbers last time. he had the finest better than expected number in the food group, not only giving you growth, he's giving you great gross margins, inflation costs have come down, highly committed to the dividend. this is a model executive of what we're looking for if you're a shareholder. >> talking about $225 million over four years. some people i spoke to believe as is often the case, it may be a low number, perhaps it will be low balling that number. it may be higher. to your point, jim, we have seen stock prices go up. we'll keep a close eye on conagra shares. many expected a deal that should happen and it finally did happen and both sides are relatively happy. ralcorp happy with the price and this is a deal that obviously makes sense for conagra at this price. don't forget that ralcorp has had trouble executing recently. they missed numbers the last few quarters. you had about 40% of shares held
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in short-term hands. a lot of hedge funds in this name at this point in the anticipation you may see a deal. >> they'll issue more equity. dividend is safe. they are going to curtail the buyback significantly for a while. >> i don't think that has had the impact as when they continue to raise the dividend. one of the things i urge people to do is if you go to the website for the transaction, a great video explaining the deal. one of the things the subtext of this deal is that when you're a supermarket, you're very challenged by a whole foods. whole foods has this premium price. you are challenged by trader joe's. we don't talk enough about that. it's a private german company. what do you do to combat it? you do store brand because gross margins of a good store brand. is it as good as the branded? because of conagra considered to be a high quality company, this is a huge store brand share
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take. many more aisles will be brand sharing. >> you were coming to the apartment making dinner and they had to take the label off. >> it has changed consumers' attitude toward labels. >> i feel torn here. it is incredible how -- torn because of the two documentaries that we've done. kirkland brand people think is superior and may be. >> jim, to your point, of course, we have watched m & a so often as a an acquire stock price goes up. terrible hair. >> it looks great. from my point of view, you got nothing to complain about. >> yet we continue to have
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companies that choose in fact to return capital to shareholders rather than go down the acquisition path. we'll talk with jim who runs m & a in the next hour of "squawk on the street" about that. he runs m & a at jpmorgan. interesting dynamic. one that hasn't changed. why i will end this conversation at least by saying we're not going to see more m & a. we won't see more. this deal has been in the works for a long time. >> if grover norquist on the right and entrenched radical democrats, are they forcing deals like this? ralcorp -- >> no. you know what they are forcing? special dividends. >> yes, they are. >> declaring special dividends ahead of possible tax increases related to the fiscal cliff. las vegas sands, the largest single donor in the history of politics, has approved a special dividend. $2.75 a share. retailer dillard's says it will pay a one-time dividend of $5 in
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december and the home of jack daniels a cash dividend of $4 a share. i don't know how large the dillard family is. these dividends are very important to some of these families. the walton family when walmart did it saved $180 million as a result if in fact we see dividend taxes go to 39.6 from where they currently are. family run companies. sheldon is a big shareholder in las vegas sands. you pay a dividend and you are avoiding potentially an increase in the tax bill as a result of paying it earlier. >> adelson loses in the election so he realizes rates are going higher so he pays a special -- >> i don't know what the numbers add up to. he spent over -- how many millions did he spend? >> for investors that want to catch the next one, it's a shot in the dark to know who will be -- we're kind of running out of time here. >> the clock is ticking. >> go to one where you have
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grandkids relying on the dividend. anyone out there? >> it's great point. >> generation skip? >> walton grandkids, $800 million a month in dividends. >> how do you spend all that? >> i don't know. >> but brown forman is a fantastically performing -- a real winner. you may know this as jack daniels. very successful -- very successful growth company. as has bean. these are very, very cash flow spewing companies and they're giving it to you. i love it. i really do. >> it's amazing. >> we talked about it so long ago after the election you started to see it pop one after another. walmart setting the tone. >> returning capital to share holders is a theme. adt as well increasing its share repurchases this morning.
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that is another name that they have been coming after. a busy morning for them. >> why do people hate the stock market so much if you wake up in the morning and see a check for $4? it's interesting. >> remember these guys filed a deed and immediately saying we don't like the way of your capital structure. they increased share repurchase now. >> cutting to this issue and i know mayor shapiro is out, i think this pleasure with stocks is not in keeping with what stocks can do for you. >> well said. very well said. >> they do a good job. i don't know -- i'm not going to get on my cd a special $4 check. yet that's where people want to be. they want to be in a money fund that's not going wake up and say, look, here's the deal. i just am giving you this big chunk of cash. it's not happened to my knowledge. >> you will get $4 if you have 1 million in a cd they will pay
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you $4 in interest is my understanding. >> that's not bad. adt does not have a yield. i thought they did. >> eurozone finance ministers agreed to a deal paving the way for an aid package the country urgently needs. the debt willing brought down to 124% of gdp by the year 2020. they made three different passes at this. finally got it done very late in brussels last night. a lot of money will go back to greek banks to try to spur some lending in that country. not a lot of clues as to how the overall economy grows from here. >> true. it's funny. we give so much press and discussion when it goes wrong and it went right here. all that happens is we just don't think about it as much. it is not -- it's not symmetrical. they do something good in europe and we yawn. something bad in europe and it's a major focus. i don't want to lose sight of
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the fact that this is something a month ago we were fretting about. >> is it good or bad or is it keeping the bad away and bad? >> i think keeping the bad away and bad is a really good way to describe it. >> not articulate at all. >> terrible. stay with me. i have more of them. >> oecd says greece will come out of recession in 2015. that would be after seven years of recession. >> seven years. is it june 1st of 2015 or more like november 2nd? what kind of precision is that? why even offer that. i do want to point out they've done nothing pro-growth whatsoever in europe. nothing. nothing. >> nothing. >> have you seen anything except for carbon taxes? they come out with carbon tax all the time. windmills. >> now, the take on some business media today is that
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resolution to increase is going to allow media to focus, obsess over the fiscal cliff back here. we'll talk to senator isaacson later this morning. >> "the washington post" is doing some fabulous coverage on the fiscal cliff. really devoting the front section to it. they have a piece this morning which says that grover norquist, which suddenly revealed is the man behind the curtain, is losing people and -- there are some. >> mostly senators. it's not congressional. >> that's what's important. does boehner really own his own people? if i am worried about the fiscal cliff, does boehner own his own people and are there democrats that favor higher taxes for the rich and are willing to do anything to get those including going over the fiscal cliff? you do have more polarization with business community. jamie dimon being the key man? >> certainly one of them. a lot of the business community is more down the middle given the two constituencies you just
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mentioned. >> we'll talk -- buffett had thoughts on that this morning that we'll get to in a few minutes. the case shiller home price report is out. which cities are making the fastest move to recovery? also ahead, when it comes to the holiday shopping season, it appears men are the new women. we'll explain that argument. take one more look at futures here. we'll see if we get traction later on this morning when the opening bell rings in just about 16 minutes. [ male announcer ] you are a business pro. governor of getting it done. you know how to dance... with a deadline. and from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. this is awesome. [ male announcer ] yes, it is, business pro. yes, it is. go national. go like a pro.
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want to get back to key housing data out this morning. the latest s&p case-shiller report is out. here is david blitzer, chairman of the s&p 500 index committee. david, welcome back. good to have you. >> good morning. >> you call it a solid report. you say it looks a lot like last month's. >> it does look a lot like last month. we have seen a lot of continuing strength in the housing sector across the country as we saw last month. as we roll into the seasonally weak period, this is september data. seasonably things are going down. we're maintaining the strength. looking at the seasonal adjusted numbers, it may evening a bit more strength this time than
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last time. >> walk us through some of the headline numbers and then some of the metrics you find most interesting. >> in terms of the headline numbers, we have got cities that had been some of the worst three, four, five years ago during some of the best. phoenix is up more than 20% over the last year. phoenix and las vegas are both some of the best cities along with san diego this month. we see some strength in areas that badly needed it. we are seeing most of the other cities generally hang on. a couple weak -- a bit of weakness in the northeast and in chicago. otherwise the overall report looks very good. >> can you just try to figure out what the leverage here is? i see phoenix up big. los angeles up big. las vegas up big. i don't see great employment in those areas. is that because the banks have worked off their inventory? i don't understand why some areas are doing better than others given there's not employment growth in the areas that are doing better.
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>> first of all, i'm not sure that employment growth area by area is the key item. consumer confidence is also a big factor. it spins off growth. you can't target city by city that way. second of all, the pattern of foreclosures when they came through and how they hit makes a huge difference. we saw atlanta get beaten up for the last six or seven months while the rest of the country was rebounding. a huge swell of foreclosures came through that. phoenix seems to have gotten over a wave of foreclosures and is rapidly recovering. so is las vegas. both of those cities apparently have a shortage of supply. you're talking about two, three month supply of unsold homes compared to five or six nationally and some cities probably seven, eight, nine months. that's also a driving factor going on. >> that's incredible. phoenix was the single most overbuilt market in the country
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other than las vegas. for you to tell us inventory has worked down, perhaps this housihous housing we have seen can continue. it's great news for companies that have been rocket ship stocks. maybe it will continue. >> clearly some of the builders have turned around and done very well. looking at the whole picture, starts, sales, new home sales across the board for housing, we're clearly finally seeing a revival in housing. it's a positive factor in gdp. it's a positive factor in the economy. it's been missing in this recovery at least since 2009. >> one last question. the "times" says the mortgage interest deduction may be a real risk here. we know what the association would say. we know what horton might say about that. have you modeled how it might impact sales next year? >> i think it had some impact on sales. my initial impression from the "times" article is realtors are
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overstating it which we're not all surprised about. i think this has to grind through. we trimmed this in the past. we capped it. we restricted it to when you refinance, you can get new money in there under the deduction. you can only get two homes and not as many as possible. it got trimmed in the past. maybe it gets trimmed again. does it get taken away? i doubt it. >> it's like apple pie. no doubt about that. david, thanks so much. we'll see you next month. >> thank you. have a good day. >> last night on "mad" cramer gave you the lowdown on understanding the big moves in tech. he's getting ready to set you up for today's action. falling over the cliff. how much of an impact would this have on deal making is this we'll hear from jpmorgan's co-owner of north america m & a
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has to say when he talks to faber later this morning. futures imply a down open on the dow. we're back in just two minutes. i always wait until the last minute.
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the mad dash this morning. cramer talking glow worm with positive comments. >> when was the last time we heard from them? business is better. i've been saying, carl, in honor of costco, this is the 60-inch tv holiday season.
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that's been the $1,200 item going like hot cakes. corning called out u.s. north american tv sales as being strong and china tv sales as being strong. it's hard to see a recession coming if people are buying big screen tvs. this is very, very bullish. i've been waiting for them. >> that's not insignificant gain on corning at 7%. >> this is a stock -- everyone loves corning technologically including the late steve jobs. it's been a dog of a stock. >> goldman likes things that have exposure to men. >> foot locker and crocks come out as their buys. steve madden is a sell. i think foot locker as nike. those who want to play nike, substantial chinese business and over inventory. you want to say the best way to think about nike going over par,
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genuine "wall street journal" for 100 is look at foot locker and say they sell a lot of nike. >> they say we favor athletic for the stickier male customer base which sounds disgusting. >> yeah. >> the countdown to christmas marches on. did cyber-monday kill black friday this year? we'll explore that question. santelli talks to sheila bair. here what she has to say about banks, fiscal cliff and bailouts. first, the opening bell. tuesday trading action when "squawk on the street" comes back. [ male announcer ] this is steve.
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he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts,
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which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. welcome back. you're watching cnbc's "squawk on the street" live from the financial capital of the world. opening bell set to ring in 30 seconds. that gives us 30 seconds, jim, to talk about the third biggest rally for facebook since going public. up 8% yesterday. i saw it up earlier this morning. >> this is a company -- i want to emphasize that i know it
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sounds silly in a world where research is not that important but when bernstein got behind this, it gave you another 15% move. he's still pushing it. i think facebook is having a good quarter. >> rare instance where an analyst made the papers today because he was so bearish and changed his tune. really exciting. there's a look at the realtime exchange at the top of your screen here. the big board. kansas city southern celebrating the 50th listing anniversary. 125th anniversary of founding. over at the nasdaq, peregrine secelebrating the recent ipo. >> i was going over what moves the stock in the last five years. it still is rumor of new product. it's incredible that that's when you get the big move. rumor of new product. and then you see the product. you get another move. when the product hits stores, it goes down.
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it's kind of like what happened here in the last go-around. apple is not expensive stock. glass and corning. i love to relate that corning says it's good so it's good for apple. remember that's a good relationship. >> speaking of apple, gm is going to integrate siri into their chevys that may lead to a twitter question as to what siri can do for you when you're in a car. is this a new chapter in voice integration? >> it makes sense. peyton manning knows how to talk to his car. i do wonder whether there is a little bit like that episode in "the office" where she guides you to turn into the lake. i like "the office." >> interesting to watch. corning at the top of the winner's list followed by
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conagra. brown-forman. >> keep an eye on retailers. many were weak. macy's was down substantially. costco was down. home depot, lowe's. most of the big ones. amazon was up yesterday having been cyber-monday. today a mixed bag right now. no real direction. i'm watching jcpenney shares up by 1%. >> did you see what the borrowing costs was for amazon? what price they borrowed? they borrowed money -- >> first time in 15 years. >> they are borrowing money at the price of what the government -- this was incredible to me how cheap. people are going to throw money at amazon. here's the question. do you think that amazon which can raise $3 billion in a heartbeat at 7.42 on tenure, how does best buy laden with richard schultz debt convert on a
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ten-year? >> it's very difficult. cost to capital differential between amazon and best buy particularly if best buy would go the lbo route. even at current levels, it makes it very difficult for best buy if in fact -- they are still generating free cash flow at best buy. the concern from what we just heard from the company a week or so ago was that was coming down sharply and that is a key concern for those who would think about potentially making a bid for best buy which, by the way, at 11.50, 12 bucks, $17 number out there is a significant premium. i'm going down a different road here. your point is a good one. amazon has unlimited firepower including in the capital markets if it chooses to use them which it doesn't really need to any way. >> look, if you give an average retailer $3 billion, they wouldn't know what to do with it other than to buy back stock. this is a pinky brain situation today. what we are going to do today?
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take over the world. >> i got it. >> you have kids. >> that wasn't a show we watched. you make constant references to the show. clearly you watch it even now. >> by yourself. >> now that i'm tired of watching alaska bull worm of spongebob, i have moved on. >> spongebob i see a lot of it. >> that one i'm familiar with. >> sunday night tv. tv cartoons. you watch them with younger people and it's like watching a game of thrones with your kids. >> whoa, boy. >> i want to record that last five seconds and replay it over and over. >> good finale though. >> it's the journal's turn today to look at hp. the questions are they beginning to turn on meg? >> you know, we got a shareholder lawsuit yesterday not unexpected. you'll get plenty of strike suits here in terms of what the company has done.
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listen, i don't think -- it's a very difficult road that she's going down. >> you're not -- >> i have no sense that her board doesn't fully support her at this point. meg is the company ceo. ougautonomy is just another pla of complexity you added to an extraordinary difficult set of circumstances. she may have moved on from that. it may be more of a pr problem than execution problem for hp in some way. i don't know. >> carl raise as great point. she was on the board. i got a lot of pushback. i did not slam her yesterday. i got pushback from very smart people saying when you're on the board, and you have them saying the company is no good. >> we asked her that question in an interview we did a week ago. interestingly she said we heard things and ran them down and found no proof. that being said, it is not a board's job to forensically account for things. what it is a board's job to do
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is raise your hand and say i have reservations. i want to understand more. i'm not sure we should be doing this. their cfo did it but the board backed the then ceo. i don't know if this can be laid at the feet of meg. that seems a bit much. i tell you what you do know. it is long, long, long, long turnaround for this company. >> the guy comes on tv and normally i would say he's not taking the fifth. kind of positive. >> we'll see. what i like about this situation is if serious fraud office in the u.k. or s.e.c. choose not to move ahead with anything, we can revisit this saying why did you level the charges, was it accounting misappropriapropriet all. >> one of the things for people that want to understand the accounting, sales has tremendous presentation about how to really do the accounting.
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a lot of people have said sales force -- i know s.e.c. is relying but -- relying on their work. i will say this. it is easy to understand how you can be buffaloed. this stuff is hard to understand. accounting on subscription businesses, deferred revenue, these are really hard to get. >> we'll see. if we can get a smoking gun from hp that proves their point whether it's e-mails or something else that really proves that there was going on, we'll see. >> i'm trying to be articulate. >> and succeeding this time. >> pisani is on the floor. welcome back. >> two one declining stocks. what i said last week applies. there's a honeymoon going on between congress and wall street that continues as long as
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there's no indication that a fiscal deal is unachievable. a lot of naysayers messaged me over the weekend saying the big problem is going to come with a credit default. if we don't get substantive and not a mild thing, there's going to be a credit default in february, march or april. what's necessary to avoid the credit default? some down payment. the second act is some clear indication of what to do with medicare and defense stocks. they have to give a clear indication otherwise there's going to be some kind of credit downgrades in the months going into 2013. how about the greek deal? i fell out of my chair. this is a default in all but name. look at this. an extension of the loans for 15 years. 15 years. $245 billion of loans. deferral of interest payments for ten years. deferred for ten years. and a reduction in interest
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rates. imagine this. you have a 30-year mortgage at 3%. now instead of a 30-year mortgage you have a 45-year mortgage. instead of 3% you're paying 2%. how about no interest payments for the next ten years on your 30-year mortgage? that's the deal the greeks just signed. it's staggering because what's happening here is don't call it a default. it's not a default. it's a restructuring. the fact is this is the first step on forgiveness of the debt. they're not officially forgiving any debt. don't say that. they'll freak out on you. the fact is that the next step from here is going out into the national governments and with the eu and getting some changes in the law that will allow for direct debt forgiveness. that's the problem. they can't do that. it's illegal right now. that's what you'll see. this was a big deal. the first step along the way to forgiving all of that greek debt. they're not going to repay the money. it's just going to go away over many, many years. let's move on and talk -- i'm telling you, it's a big deal on greece today.
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great news out of case-shiller. you want year over year changes. year over year up 3.6%. all right. it's not titanic. we had a big drop. it's continually moving in the right direction. home metricks moving in the right direction. you made a big deal over las vegas sands that came out yesterday. i added some of these up. certainly nice that it's happening. it's not amounting to a lot. there's not that many companies out there doing it. to me more important is getting a company to move dividend payments from january into december. even there a few companies are doing it. january of this year i checked on this $21 billion of dividends was paid. a big month for dividend payments in january 2012. the only major company that announced they're moving from january to december is walmart. that's 1.3 billion of the 21 billion of dividend payments made in january. now you have $19.7 billion in
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dividend payments still out there. this could change in the next two weeks if we don't hear anything, you'll see more companies doing it. so far it's more of a trickle than a flood. back to you. >> that was just the greatest -- the greece road map that he just gave us is the best i've heard. i want to thank you for walking us through it. it's sobering. maybe the dividends aren't as big as we make it. it's exciting. that's not a lot of money. let's shift to bonds and dollar. rick santelli at the cme group in chicago. >> we had a better than expected durable goods numbers. we know it's a very volatile series and revisions to last month but all in all not a bad number. if you look at intraday of tens you can clearly see that right after that 8:30 release we traded down in price up in yield to 1.67. it was worth a couple basis points. if you open the chart up, what you can see is that the pivot we've talked about for months still remains at 1.60. you can clearly see that on the chart. if you look at the last round of
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trading activity, the highest closing yield was 1.69. all things being equal, that means the technicians here will look to test nine basis points under the pivot around 1.50 to 1.51. stock markets are important obviously. economies behind them are what makes them price or is it? look at the japanese nikkei. it's now the best level since april. politics, boy, you talk about a country that just can't get anything right, the economy, the political landscape, but one thing seems to be emerging as a positive. probably driving the stock market move and that's the yen is weakening. since april the dollar is the strongest. it's an export economy but an economy we should worry much more about is the shanghai index in china and this stock market is at the lowest levels since early '09. what does that say about the global economy? think about it. back to you, jim. >> great analysis again. what a disparity.
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>> worried about panasonic and sony and these companies and they need that yen to be lower. let's check out latest news in energy. mary thompson is at the nimax. energy all over the map. >> that's right. this morning we have the energy complex that's mixed. we did see initial support to crude oil from that greek deal but that quickly dissipated. dollar strength keeping pressure on crude today. traders of course keeping watch on tensions in the mid easts s but because that provides pressure to crude oil. those are some of the factors at play today. look at the rest of the energy complex, december contracts for gasoline, heating oil, as well as nat gas expire today. natural gas continuing the decline from yesterday after it came under pressure because of a warm forecast for the month of december. checking gold prices. they are pulling back today. expect volatility later as well because of december contract expires. david, back to you. >> all right.
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thanks very much, mary thompson. i wanted to look at two of the companies involved in the largest deal of the day. that is the $6.8 billion acquisition announced this morning by conagra who has been trying to buy ralcorp for the last couple years and they got a deal done. this is not the same ralcorp they approached last time having spun off its post division. a pure private label business here that we're talking about here for ralcorp. conagra shares up highest level since 2005 adding its name to a short list of companies that have chosen to do deals but a long list of those that have chosen to do deals whose stocks go up meaning we see this often in this market but it hasn't been enough to convince other ceos that it's worth getting into the deal game so to speak. they rather return money to shareholders at this point. a safer way to go.
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cereal products, snacks, those are things in the private business that ralcorp does and that stock is up 90 bucks a share. working on it the last month say people close to the situation ralcorp may have come down a bit in their ask allowing them to get the deal done. they won't close it by the end of the year. >> why do they lower price when it looks like the business is okay? >> it's missing the quarter. i think it's the presence of an activist on the board that wants them to do something. it is a shareholder base with 40% or so short-term that have been pressuring management. all of those things play a role at least in the decision to management to say let's just do it. and the guy who runs it may not have wanted to originally but apparently it went well and smoothly. finally on night trading, i want to get to that one. that stock up a bit. kate kelly reporting two groups vying to buy this company.
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getgo in connection with jeffries own 40% of the company already but making a bid. that is what i'm hearing now. and kate has reported the same. later this week knight's management is scheduled to speak at a kbw conference. you can expect they'll cancel that. what i'm hearing is don't be surprised to see a deal done over the next few days maybe announced on monday. book value at night. $3.25. keep that in mind. >> don't go crazy on it. >> keep that in mind when you think about what they're willing to pay. more than book but maybe not that much more than book. >> speculators remain. >> value added right there. thanks, david. bargain hunters who bought facebook two months ago and held on have a reason to smile. coming up, should they stick with the social network or take some profits? also ahead, we'll talk fiscal cliff with republican senator johnnyi
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>> i got to live the american dream. build a business to nothing for real size by providing what the consumer and businessman wanted. i'm scared to death that america is losing that ability. we see it in the banking business where the american banking environment is much tougher to deal with than even the u.k. british environment. >> that's jim with vernon hill last night. what a man. >> astonishing. this is a guy you put $10,000 with him and when it came public, he made 3.7 million. remarkable. what's really sad about this, he's a great small businessman. owned burger kings in philadelphia and then took it and took it larger, larger and larger. for him to say the u.k. is a better place to do business, i regarded the u.k. as one of the worst environments possible and they hate banks there and they
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are worried from small businessman who is the guy who has always gone to commerce bank. you hear people saying the job creators and small business, vernon hill was the way you got a loan. if he's worried, i'm worried. >> how do you have him and buffett at the same time saying opposed things about this country. >> i never like to go against warren buffett. some say vernon hills bank had regulator problems in philadelphia. i just know that one guy is boots on the ground and other guy is boots in omaha. i think there's a difference. omaha very wealthy area by the way. >> speaking of banks and future for banks, where does the fiscal cliff fit in? stick around for santelli's live interview with sheila bair. up next -- ♪ >> coming up, jim cramer is rested. jim cramer is revved up. jim cramer is ready. six stocks in 60 seconds when
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welcome to the world leader in derivatives. welcome to superderivatives.
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nice shot of the christmas tree at 30 rock. simon hobbs here it tell us what's coming up at 10:00. >> we'll look at success of cyber-monday and relate it to black friday and what it tells investors on where to move in retail. we'll look at facebook and we'll also ask whether we're watching the grover norquist tax promise die in front of our faces. we'll be joined by the republican senator johnny isakson from georgia. >> we'll get six stocks in 60 seconds starting with national oil. >> to see them downgrade means they are good. morgan stanley is good. i'm worried about national oil. >> illinois tool. >> ceo passed away last weekend. people wonder what's the mission going forward. i like it. >> jpmorgan likes markwest.
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>> a deal last week at 46.5. that's a huge move. pay attention to secondaries. they are working. >> bernstein cuts boston scientific. >> we don't talk about this group enough. there's been turmoil. st. jude, hard to keep track of them but this was a company on the move and they'll stop in its tracks. >> norfolk southern. bernstein says they may miss. >> they may make the quarter shows me tocoal may have bottom. yelp is a service people like. the best performer of the special media that i look at. other than linkedin obviously. we have a big show. i sound like ed sullivan. we have manny chirico and we
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have gary rodkin. >> kellogg's at a 52-week high. >> pringles is working. a major success for kellogg. >> we'll see you tonight, jim. when we come back, we have richmond fed, consumer confidence and also ahead, a holiday shopping trend that indicates men are the new women. "squawk on the street" back in a moment. but when i was in an accident... i was worried the health care system spoke a language all its own with unitedhealthcare, i got help that fit my life. so i never missed a beat. that's health in numbers. unitedhealthcare.
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welcome back to "squawk on the street." two important november data points. richmond fed, the manufacturing index up nine. an exact opposite. we're looking for down nine to ten. up nine. that's good. last month's minus seven unrevised. look at consumer confidence. looking for 73. 73.7. and last month, 72.2 upgraded substantially to 73.1. whether you look at consumer confidence from the conference board, university of michigan sentiment survey, they both reflect some good strength. we've had a pretty much a litany of better than expected data points today starting with
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housing. carl quintanilla, back to you. >> welcome back, rick. good to see you again. a lot of data just a few moments ago that rick brought us. let's bring in our senior economics reporter, steve liesman, looking through his rose colored glasses. >> they are neutral. they are not rose colored just for the record there. or as objective as i can be. these are pretty good numbers in the context of we were not expecting very much. the first thing i like is confidence numbers. confidence is remaining at a decent level. the pickup we had over the last several months remains in place. we're at a decent level suggesting two things. the fiscal cliff issue does not appear to be affecting the psyche of the consumer out there, which means that spending may still be okay in the holiday season. and the other thing it those
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relatively high levels remain in place so that's good. i have questions about what's going on on the business side. numbers not as bad as expected. business investment numbers were good after all of the economists, 90% of the economists i read were looking for negative numbers on that business investment number. communication up. shipments were down which will feed into gdp. not much more than expected by economists. barclays looking for 2.2% growth in the fourth quarter. they are putting this number in for october. so let's see if we can make give you a sense of what may be going on out there. first is consumer appears to be keeping on keeping on and business investment looks to have stabilized at least and maybe slightly upticking given what's happening in richmond. chicago midwest manufacturing index was sort of down but in
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line with expectations. i'm going to give business investment a neutral and put a plus in the consumer column here and, simon, i think right now things are changing and we remain to see the effects of sandy on the data. >> let me return to this subject of why the consumer remains so strong. do you think the average american is aware of what the fiscal cliff is when you look at the numbers that watch television news or read newspapers and the degree to which they may not have spoken about that subject during the election campaign and most people thought by taxing rich we would solve problems we have in america and people have no idea that general low income americans have no idea i would suggest that the fiscal cliff is on its way. no wonder they are out there spending money. no wonder. >> i wouldn't make a distinction between what low income
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americans or high income americans know less than anyone around the scale. on the other hand, simon, it may be that people think they'll solve this problem and it's not going to affect them given the pledge by the president not to allow the tax increases and spending cuts to hit people $250,000 and below. that's a distinct possibility. i would also point out, simon, you go get case-shiller numbers showing an increase in home prices and that's buoying the optimism of the average consumer out there makes he or she more willing to spend. if the fiscal cliff is resolved in a way that puts off spending cuts, it won't affect the average american. >> the market taking it in stride. dow down 24 points. a lot of data as we said at the top of the hour. countdown to the cliff. republican senator johnny
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isakson of georgia will join us. will he set aside his pledge on tracks increases? facebook shares are climbing. should you cash in or jump on the bandwagon? we'll talk about facebook shares ahead. rise in mobile commerce. digging into data on why cyber-monday is black friday killer. >> what a resolution to the fiscal cliff might mean for deal making. david faber has an exclusive with jpmorgan's co-head of north america m & a. >> conagra foods agreeing to buy ralcorp for 4.95 billion in cash. a deal that would create one of the largest packaged food companies in north america. $90 a share cash. kayla tausche has been on this story since the very beginning, which is almost two years ago, right, kayla? >> about a year and a half ago, david. it's been a long time coming. conagra has been interested in this combination for years.
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it was march 2011 the company first approached ralcorp with a cash and stock offer but then conningagra raised it. final bump was to 94 a share in august before walking away. given its numbers it would seem that $90 is a low offer but not considering what happened to ralcorp since then. they spun off post cereals for which shareholders got half a share meaning that shareholders in waiting for conagra to come back have got $106 per share when you look at post rise today $107. what's interesting to note is that conagra in a letter last year warned ralcorp that spinning off the cereal business would significantly value leakage. it's now $225 million that it won't save until fiscal 2017.
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largely that's due to conagra buying a smaller company today. a nice boost today up by 5%. a deal the market expected for a long time and that shareholders were just waiting for at this point with an activist on ralcorp's board. >> composition of that board and shareholder base having a role to play here. we should note that tonight on "mad money," jim cramer will sit down with gary rodkin, conagra ceo. looking forward to that. from one deal to another. greece's creditors agreeing to a plan. let's talk about greece. i think it's tooplicistic to say they are kicking the can down the road. for a long time the rest of europe has not given up money. it has not given a wealth transfer to greece. for the first time in a very difficult deal for a lot of the
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rest of europe, they've done that. usually they just loan money to greece. in order to cut the debt and now talking about overall of 40 billion euro cutting debt, they'll change maturity of the loans and money they make from the loans they already gained given to greece. there's 100 basis point cut and lengthening of the maturities on the first deal that they did and then on the second deal. in fact, there's a delay of ten years on interest payments and matures are delayed for another 15 years. they are also going to hand over those individual governments or central banks within ecb more accurately about 11 billion in profits they made from intervening on the market in greek bonds and will now fund a buyback by the greek government where they will buy back their own debt in the market on 35 cents on the euro. that's the problem. we're not sure how that's going to work and how they're going to
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incentivize on rest of the market. what's important is this unlocks the way to greece getting 43 billion euros in promised aid by the time its bills become due on december the 13th. there are other hurdles apart from pushing through this debt buyback which it is conditional upon. you have to ratify it. germany will attempt to do that on friday. the big deal, the big issue, and remember imf talked about debt sustainability. it pushed the rest of europe towards a greater reality on debt sustainability on greece. that's for sure. the big question is what happens in 2016? the rest of europe saying we may forgive debt. really importantly in 2016. we may give up some of the loans. if they have by that time reached a budget surplus. the path to that budget surplus is difficult. already the major party in greece today is suggesting that it is not happy with what's going on.
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let's not underplay what is a very important deal overnight. not just kicking the can down the road. they are biting the bullet for them to a real great extent. >> doesn't that thesis sort of depend on austerity fueling growth and not taking away from growth? >> you would assume that's factored into the projections they have. when all is said and done, they believe debt is 124% in 2020 and if they reach it in 2016 they'll caught it further to 110% by giving up values of the loans. >> that's different for the public sector. >> correct. they forced the private sector to take losses already of course course. >> still part of the euro. >> when we come back, we'll turn our attention to this country and talk about the cliff with
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senator johnny isakson. the question is will he stick by his anti-tax stance? >> we're counting the days until christmas. did cyber-monday kill black friday or are brick and mortar stores used as showrooms this holiday season? ♪ [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. ♪
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>> i think grover is wrong when saying we can't cap deductions and buy down debt. i want to buy down debt and cut rates to create jobs but i will violate the pledge long story short for the good of the country only if democrats will do entitlement reform. >> senator lindsey graham this weekend on nbc. one of several senior republicans who say they will break ranks to reach a deal with the democrats. republican senator johnny isakson joins us this morning and has joined the norquist pledge. good morning to you. >> good morning. >> i don't want to make this a conversation only about grover because that seems to be all people want to talk about. i wonder if senator graham's comments and some others if you're beginning to really sense a turning of the tide here? >> well, first of all, you got to remember we have to talk about comprehensive tax reform and talk about spending cuts and talk about debt and deficit reduction. pulling out an isolated piece
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like raising rates or taking a mortgage interest deduction or whatever it may be, it doesn't serve a purpose. you have to look at the entire problem. if you don't do that, we're all dead. >> where does norquist fit in? has your own view on the pledge evolved? >> i'm not for increasing tax rates. i'm for reforming the code, raising the base upon which those rates might be applied. i'm not for raising the rates. >> why is this attracting a -- why is revenue in general attracting the share of the debate? i heard complaints that say we're not giving due attention to reform, to entitlements. is it just that taxes are sexy, is that it? >> if the media would stop asking about it we could talk about comprehensive reform of entitlements and of spending. it's a complicated, complex process. if you pull out one part of it and have a debate over that part, you're redirecting
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america's focus from where it ought to be which is comprehensive reform of spending, entitlements and taxes. >> you have said before, senator, you think an agreement actually is possible by the end of the year. we saw the leaders come out of the white house and everybody felt good on that friday. since then, we have some model portfolios that are based on us going over the cliff and those portfolios are up since election day. are you as confident as you were when you first said that? >> i am because i was in the congress in september of 2008 when we blinked during the last fiscal crisis. the markets collapsed and we had a long recovery that we just finally recovered from very modestly. i think inaction by the congress would be reprehensible and i think we'll get a bridge to reform next year. >> do you think that will happen before year end or do we somehow spill into january and then get serious? >> we ought to be serious right now. i'm serious right now. i hope harry reid, mitch
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mcconnell, john boehner, nancy pelosi will be serious. going over the cliff doesn't make any sense. >> we all remember the t.a.r.p. vote that you reference. that really didn't come to a resolution until the markets -- i would argue -- scared washington. i wonder how important you think that is this time? do stocks need to fall before the two sides really get committed at the table? >> that is a terrific question. that's the main question. in two days we lost 1,600 points in the markets. it took us a lot longer time to come back and recover. i sat there and stared defeat in the face. we can't do it now. the markets will respond to certainty. that's what congress needs to give american business and american people. certainty about taxes. certainty about spending in congress and certainty about our commitment to lower the debt. >> how do you argue that you are considering all elements of reform if in fact you're going to stick by the norquist pledge.
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is there anything wrong with as senator graham has said with saying i made that pledge back then but my job is to be a senator every single day and i feel differently now? >> i'm not arguing about a pledge whatsoever. it's our job to be a senator every single day. we have to take on the problems of the day. we have a major problem. i think reforming the code makes the most sense. it worked in 1986 when we lowered rates at the top margin from 70 to 28. but expanded revenue because we cleared the base out. removed a lot of deductions and had rates that were lowered applied against a much higher base which raised revenue. >> you mention the mortgage interest deduction. big piece in the "times" about what that would do to housing. is that the third rail? do we dare touch that in a serious way? >> it's an important tax policy
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to drive home ownshowne ownersh american dream. i think if you argue about them individually, you lose. if you put a means test or a cap on itemized deductions at $50,000 or $30,000, it doesn't apply against a specific deduction but rather against the aggregate of deductions. that's a sensible way to reform deductions. >> you think that's where we're headeded headede i assume? >> it makes political sense. if you capped it at $50,000 you would raise $775 billion over the next decade. >> that's certainly what senator corker proposed earlier in the week. senator, good to talk to you. we'll talk to you again soon. >> great to be with you, carl. >> carl, it's a second day of selling for one major oil and gas company. let's get a market flash with courtney. >> thank you, simon. look at shares of mcmoran.
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investors are disappointed on negative notes on the progress. shares down almost 22% in two days. simon? >> thank you very much. next, resolving the fiscal cliff. what could it mean for m & a? still ahead, as holiday shopping season kicks into high gear, find out why men might be the new women. you should know that axiron is here. the only underarm treatment for low t. that's right, the one you apply to the underarm. axiron is not for use in women or anyone younger than 18. axiron can transfer to others through direct contact. women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur.
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[ male announcer ] break from the holiday stress. save on ground shipping at fedex office. we're still trying to get a handle on exact figures for cyber-monday. it looks like shshthat shoppers have spent $1.5 billion online. how does the rush to shop online affect your decision as an investor more broadly within
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retail. gentlemen, welcome to the program. thank you both for joining us. >> thank you. good morning. >> thank you, simon. >> the figures are astounding here. e-commerce sales were up 32% on thanksgiving. on black friday up 26%. on cyber-monday, they were up 28%. just talk us through what is happening here. what are you seeing from the way in which you service your major clients? >> i think first of all a key message to take away from this is overall shopping period itself, the seasonal shopping period is going through a terrific cycle. the impact of cyber-monday on the rest of the weekend whether it be small business saturday or black friday or even now what's part of thursday evening on thanksgiving, is a demonstration of two things. one, from the consumer side it's that they are becoming comfortable shopping across all channels using devices and tablets and phones and whatever means they think is appropriate.
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but it also means that retailers themselves have learned how to serve customers through those channels. it's been exciting all of the way around. i'm excited and i think it's terrific that the estimate greater than four points comp for overall holiday season is off to a great start. >> is it accurate to say the vast majority of sales are still made in bricks and mortar retailers? >> yeah. i think that's absolutely true. i think that will continue to be true for a period of time. i sort of think about it as my kids. my kids are old enough where they don't think about the store experience the way i did growing up or others might growing up or we went for the experience and it was as important to touch and feel the merchandise and product before we bought it. kids are more comfortable doing that less and getting more involved digitally but that's 10 to 15 years before we see a significant shift further to mobile or online buying. clearly it's become an important factor and retailers recognize that and i think you'll see more
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of that for the next five years to come. >> walter, i'm looking down your client list here. gap, kohl's, best buy, what do you say to best buy? what should their strategy be in this environment? we know the best buy story very well on this network. >> i think obviously the best buy stores are one of the categories hit hard through the omni channel shopping experience. they are selling commodity product. some of it is fashion like in the way it responds. you know, tv is a tv and people in the minds of the consumer can go to any number of outlooks to get those products. i think as these categories get that way, they need to figure out how to bring them into the stores. they need to think about omni channel.
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combining the best of brick and mortar stores with online experience, mobile experience and even the catalogs in some cases and consumers will respond well to that. companies that can present their brand across a variety of different platforms. >> i keep seeing the ibm research paper reference that says the percentage of cyber-monday deals originated on twitter were zero. 0%. i don't know how true it is. i wonder if you think we're overestimating the power of some of the new platforms. >> i think we could be overestimating the power of the platforms. if you work with merchants and marketing people inside retail, they are absolutely exploring those other vehicles and trying to reach the consumer. that's just one of the mechanisms they are trying to send a message out to catch people's attention to make the purchase. twitter, i think, could evolve because buying socially and getting consumers to sort of learn from their peers what they think is great and what they
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should buy, think will continue to be something interesting. i think the twitter statistic is a unique one this year but doesn't mean that trend has changed long-term. >> just before we let you go, i want to pick up the distinction you made earlier that best buy sales come odd tiesed products and that's the problem. isn't the end game that as you put more products online, you do that to all of them. they will go to the cheaper place possible where they may be sold and so value in a retailer putting together a collection and putting it online if people will go and choose it somewhere elsewhere it is cheaper. what i'm asking you, walter, are your clients ultimately lambs to the slaughter with this endeavor? >> i don't believe so. i believe that consumers shop in stores for a number of reasons. not all of price driven. the fact that 139 million people came out to shop either online
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or in stores on black friday means that there is some kind of cultural forces at play here. shopping is entertainment or just the idea of getting in the holiday spirit by getting out and touching the merchandise and rubbing elbows with other shoppers. we kid about it. there's also a lot of holiday spirit in the shopping and we see that in the malls and we see that in the stores and i think the retailers are doing a very nice job of blending that along with in-store experience and providing consumers with the option of buying their product through another channel either mobile or online. i think again retailers that get that right and are able to blend those channels together in an omni channel fashion are going to be successful with it. >> not even december. guys, thank you. >> don't forget to tweet us today. gm announcing it figured out to
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integrate suri. it brings us to this morning's squawk on the tweet. worst thing suri could say to me while riding shotgun is what? we'll get your responses throughout the show. >> you might think that if -- facebook shares closing above that $25 level for the first time in four months. the third biggest gain since going public. is the bottom in for facebook shares? plus, we have uncertainty of course over that fiscal cliff. if it gets resolved, what would m & a do? i'll ask the question. jim woolery will be my guest after this.
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facebook is up more than 35% in the last three months crossing over the $25 threshold again today. should you take profits here? we have global head of internet and media research. good morning to you. good to have you. >> thank you. >> people began to wonder if this was going to be long lasting when it first started to turn. it has lasted longer than a lot of people think. is this the end of the road? >> i don't think so. we're basically recommending that people stay the course. you stated that it's up 30% or
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so since they reported. but remember $18 was a trough. the stock had ipo at 38. maybe never should have been a 38. at 26 we're still positive on it. we think there are a number of catalysts that over time should take it even higher but we still feel comfortable with it up here. >> next three to six months, what keeps it going? >> remember they -- you know, six months ago they weren't on mobile. today mobile is doing a run rate with one ad platform to sponsor stories they are already doing a run rate of a billion dollars and in the last six, seven, eight weeks, they launched half a dozen new ad formats on the mobile platform and on the desk top which i think particularly on mobile platform will continue to drive, you know, a fair amount of advertiser demand. one thing that comes to mind or
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one particular product that comes to mind is the gift which is less of an advertising and more of an e-commerce play. we think that could be a billion dollar plus business overtime. they also launched the ad exchange which i think is potentially a multibillion dollar industry for the business and we think facebook is well positioned for that business as well. >> you talk about the early days of mobilization. how far can they take that? >> so if you look at the business basically a year ago, very few people were accessing facebook on mobile. i should say advertisers were not exposing themselves on the mobile platform and yet engagement was steadily climbing. if you look at data as of october, it's the first time
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where we saw that mobile enga engagement exceeded desktop engagement. that's very telling. i see no reason why over the next two to three years the majority -- the great majority of facebook users would be using either their smartphones or tablets as primary access point for facebook and if you have 60% to 80% of users accessing facebook primarily over that platform and eye balls are there, advertisers are going to follow even at billion dollar run rate for these sponsored stories, that's 15% to 20% of overall revenues. there's no reason why over time those two metrics shouldn't converge. >> there was a trading floor in london that banned traders from reading serious newspapers. the instruction was buy the market on the way up and sell the market on the way down. isn't that really the approach for facebook? no one knows what the long-term value is down the line. it's a trade. buy it on the way up and sell it
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on the way down. >> well, remember, i mean, this stock along with others like linkedin or yelp have been expensive. even at $18 if you look at straight pe basis or free cash flow, it still would look rich. that said, if you are a large cap growth looking for exposure in the internet space right now, there really aren't that many companies that you can choose from. i think facebook is one of them. a lot of people did not want to touch it a month ago because of the huge lockup expiration that was coming up. and so people were sitting on their hands. a lot of people wanted to buy but didn't know how the stock was going to react. i think that risk is now out of the trade. it is the reason or one of the reasons why the stock has run up. i think fundamentally you still should see some fuel in the
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tank. >> that's amazing how that lockup was a head fake for so many people who thought it was going to go the other way. thanks so much. >> exactly. thank you. still ahead on the program, rick santelli is going to talk to former fdic chair sheila bair and hear what she has to say about bailouts, banks and the fiscal cliff. >> what might a resolution mean for deal maker? will sit down with jim woolery in just a moment. ♪
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>> there were concerns about s.a.c. going forward. s.a.c. looking for reassure folks about what may be going on to fill them in on any knowledge they may have and this is not terribly common i'm told. they do have a quarterly performance call that they hold for investors. to have a special call in the wake of a legal situation like this, well not unprecedented, david, it's not terribly common either. >> always important to point out 9 billion of 14 billion under management is steve cohen's are those of his employees. he's committed to paying attorney fees. >> those are changes he implemented within the last few years. about 60% of their 14 billion is either steve or other insiders at the firm. by the way, it's not entirely clear whether cohen is on this call tomorrow. senior management will run it.
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whether he himself will be involved, we'll see. >> kate, as always, appreciate your updating us. we have a month or so left in 2012. it's another forgettable year for mergers and acquisitions in the u.s. deal volumes down about 100 billion from last year. that according to deal logic. when is the slump going to end? let's ask jim woolerly. always good to have you. we have five, six weeks left. five weeks. will we see resurgence in activity? jim cramer this morning getting excited with me because of the conagra deal. >> i think we'll be in the same mode we've been in. this is the most important moment that we've had in the m & a market since the crisis. first we had to stabilize the market post-crisis. then we called out from m & a perspective and europe hit. then we waited for the u.s. presidential election. now we come to the cliff. if we get a deal done, this
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market needs a catalyst, david. that can be the catalyst forward because buyers frankly are in a wait and see mode and they have been. there's not been a lot of risk to not acting. in fact, the risk har to action. despite the fact that the fundamentals have been for the last couple years the best fundamentals we've ever seen. >> investors reacted positive to deals including today. back to the fiscal cliff. all right. let's say we get a resolution. right away, m&a activity heats up. take me how it will help. >> i think in the first quarter following a deal you will see a resurgence but it won't be dramatic. but that activity will cause buyers to believe there's finally risk to not acting. what we need is a consequence to inaction. that will be deals that will be announced in the quarter following the cliff, which i
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absolutely believe they will be. we've got deals on the shelf that are waiting for this kind of activity. those deals move into the market. sentiment shifts. as you know it can shift dramatically and now all of a sudden i'm concerned that i'll get priced out of an attractive market. >> wait a second, now momentum is starting. i'm seeing strategic stuff going on in my sector. you say you have things piling up in a sense. are they waiting? are there deals that will happen if we get the so-called -- i hate to use the word certainty. >> it's a wait and see market on the buy side. it used to be if i'm a buyer, four out of six issues, i would do the deal. now i need six out of six. not many deals meet that standard. we need to get into a market where there's consequences to not acting. the consequences we've seen so far have been this dramatic rise in activism which is still there and growing. assets under management follow the money. money is flowing into activist hedge funds.
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they're going after bigger game and will continue to be a huge factor. it's not been enough to force action on the buy side. >> it force action in the sense of returning capital to shareholders which seems to be the preferred road for many management to go down than taking the risk of doing a deal. >> it's a less risky move to use -- >> that dynamic has been in place for a while. fiscal cliff deal changes that? anything else that may change that? >> i think the cliff is it in a nutshell. >> you really do? >> i do. that will signal to the market that now there's a shift. now i'm at risk of being priced out. i can't -- right now if i'm a buyer, i can sort of wait and what's forcing me to move? the price of the target is not changing. financing markets aren't changing. they're at record attractive levels. i need a reason to move. the cliff will give me that reason because the certainty
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that it will provide and knowledge i know if i don't move competitors will, that's the dynamic we need. we need risk and consequence to inaction. >> we hear that from many executives. >> many executives. >> we hear it all the time. almost too much you wonder if it's an excuse for not moving. >> they want to have a defense because there's a growing divide between management and shareholders. shareholders favor action. they like return of capital. they like m&a. it's a gigantic number. >> we're seeing it again today. >> it has never happened. >> not 10% but a big move. now one sector that does need to move is the private equity. they've got money sitting there that they raised. they have lps. this he have to put it to work. we've seen a heartbeat, we have yet to see a great deal of activity despite low rates and
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robust high yield market, i don't get it. >> more activity is coming. slower than frankly we would have thought it would be. more activity is coming, david. i will tell you that at jpmorgan we're prepared to do deals and finance deals at $15 to $25 billion level. >> are you guys smoking something over there? come on. >> what we have a combined powerhouse on financing and m&a. >> what's the issue? equity check? when you get up to these big numbers on some of these deals and it's a $3 billion equity check, you require more than one firm to do it. lps don't like it. >> it's the equity check. it's receptive targets frankly. you have to have a willing seller on private equity doesn't move aggressively. they want to see sellers that are receptive to 20% to 35% premium. and that's going to be the dynamic. the financing is there. we can do the deals.
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at jpmorgan we believe there's going to be more of them. >> all right. i think they were just calling out to all you private equity guys out there. right here. jim woolery. he'll take your call. >> do you want my number? >> we'll put it up on a full screen. >> great to see you. >> jim woolery. co-head m&a north america at jpmorgan. carl, back to you. >> what cost $2.5 million encrusted with sapphires, rubies and white diamond? the answer to that later on in today's million dollar minute but first rick santelli is working on the next hour of "squawk on the street." >> that sounds like a heck of a piece of jewelry. i hope that taxpayers don't guarantee whether it's stolen or not which leads me to what we'll talk about on the santelli exchange. the taxpayers of this country just seem to be guaranteeing just about everything whether it's flood insurance, crop insurance, banks. let's see, retirement. entitlements. savings accounts. all of this guaranteed.
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housing. mortgages. all guaranteed by the government. but why? i'm going to find another item that you might not know set to expire. it's checking accounts for business. we guarantee everything. i think it's time we stop. tune in top of the hour. time t. tune in top of the hour. ♪ [ female announcer ] today, it's not just about who lives in the white house, it's about who lives in the yellow house, the green, and the apartment house, too. today we not only honor the oval office, but we honor the cubicle, and the home office as well. because today it's about all of us. and no matter who you are, you're the commander-in-chief of your own life. ♪ you know it can be hard to lbreathe, and how that feels.e, of your own life. copd includes chronic bronchitis and emphysema. spiriva helps control my copd symptoms by keeping my airways open for 24 hours.
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in trade an online predictions exchange which allows people to bet on entertainment to elections will no longer accept u.s. customers. companies order them to close accounts and withdraw all funds by the end of year. a recently filed suit filed alleged that it offered trading on future prices commodities like gold and oil despite an agreement from '05 not to offer trades on those and other items. i did not realize they're an irish firm based in dublin. did you know that? >> no. a lot are and grabbed a lot of
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attention a while back. general motors announcing it figured out how to integrate that famous apple voice and functionality into the two smallest cars, the chevrolet and sonic. that brings us to the "squawk" of the street question. the worst thing siri could say to me while she's riding shotgun is? tweet them. we'll air your responses next. spoke a language all its own with unitedhealthcare, i got help that fit my life. so i never missed a beat. that's health in numbers. unitedhealthcare. with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade,
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we have officially kicked off the holiday season. would diamond-covered lingerie fit someone on your guest list? be careful not to cut yourself. robert frank explains in today's million dollar minute. >> we're getting up close and personal with a victoria's secret fantasy bra. you're looking at one of the most expensive undergarments made. >> there's beautiful yellow diamond pin here with a 12.5 carat and 20 carat stone. >> it's called the floral fantasy bra. the pla plus the matching belt
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set in 18 karat gold are so he had as a set. >> i want to wear a $2.5 million fantasy bra. >> victoria's secret has a pricey perfume called bombshell fantasy fragrance. it comes in a bottle worth $500,000. >> the bra and belt and perfume bottle are a $3 million value. >> for cnbc, i'm robert frank. >> i could quite see mrs. favor in that for christmas. >> okay. >> beware. >> she would look great in that, yes, but it's a little outside of my price point. >> she's a good-looking woman. >> thank you. >> we run that tape without a single woman on set. that's probably the better. >> i'm not sure it was aimed at women. >> let's get to "squawk" on the tweet. s siri is about to take shotgun.
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they've enter grated into the chevy spark and the sonic. we ask you to complete the following sentence. the worst thing siri can say while riding shotgun is blash. are we there yet? stay left, fiscal cliff ahead. gary, writes didn't you say we were going to the gym today? i think you just passed it. that's probably she would tell me. positive or negative? drivers could use fewer distractions and not more, right? >> i agree. i was actually using my device on the sidewalk and i was scolded by somebody carrying a huge board of wood and said look up and used the usual new york term. >> just another day on the streets. >> people shouldn't use them when driving. >> i got a lot of response on twitter, because we talk about the cliff so often in business terms, but there is as he argued serious money on the sideline. >> he can crystallize the idea
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of certainty verse uncertainty. if we get a deal he made it clear in his opinion that a lot of decision-makers will say, okay, now i'm ready to make a big decision. that's what a deal is, really. it's one of the biggest the ceo will make. le they're like why should i do that? there's a lot of risk there. if that dynamic changes -- >> he hopes that will happen. that may not be the case. >> absolutely true. he was selling good. no doubt. jpmorgan will do a $25 million lpo. we'll get the money together. >> we'll see you in a few minutes and talk europe. if you're just tuning in this morning, here's what you missed earlier on. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> that's the main point in the spirit of rising above. it's time for everyone to sacrifice a little bit and solve this now. it's not the time for ideology. >> i think that ultimately what we should do is have shared
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sacrifice, shared solutions. i don't think relying on the top 2% to pay this entire bill is a realistic expectation, nor would it be helpful to the economy. i think we have to have balance and significant spending cuts. >> i just find the displeasure in stocks is not in keeping with what stocks can do for you. >> well said. very well said. >> they do a pretty good job. i don't know -- i'm not going to get on my cd a special $4 check. we give so much press and discussion when it goes wrong. it went right here. all that happens is we don't think about it as much. it is not -- it's not similar trickal. they do something good in europe, and we yawn. they do something bad in europe and it's a major focus. >> here's a look at the realteam exchange at the top of the screen here, the big board. >> we ought to be serious right now. i'm serious right now and i hope harry reid and mitch mcconnell and john boehner and nancy
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pelosi will be serious. i think they will be serious. >> we're checking our list as the "squawk on the street" countdown to christmas continues. ho, ho, ho. ♪ deck the halls with bous holly ♪ good tuesday morning. we're live at the new york stock exchange. the dow managed to come back from a triple-digit loss yesterday. the dow is now down 35 points close to session lows. s&p is down 3 and the nasdaq is down at 6. the big deal is the conagra. that's including debt. the deal creates a packaged food company with revenue of $18 billion a year. both stocks are up on the news. that's good news for conagra, and of course a quick programming note. the ceo will join jim tonight exclusively on mad money at 6:00 p.m. eastern time. zion bancorp one of the biggest
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losers on the s&p after weak guidance. sandler neal is cutting the earnings estimates. let's get the road map. company after company issues special dividends. is there an opportunity for long-term investment in that trend? we'll tell you how to play it. sheila bair weighs in and you won't want to miss what she has to say. the new trend in retail that could make women obsolete. we'll find out when men are the new women in the words of the "new york times." all that and more in the next hour. las vegas sands, brown forman and dillard offer a special dividend to get ahead of the looming fiscal cliff. are they already worth the investment ror they making a good onetime investment? joining us on the newsline, doug
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good to have you. good morning. we had a feeling this was going to happen, right? the election confirmed the trend was going to kick off. walmart, of course, is a big one aa few weeks ago. are you surprised at the number of companies jumping in? >> no, and i think as it gets more uncertain, whether we're going to go over the cliff or not, you see more companies do this. you know, in the end you want a company that thinks first about shareholders and companies that look to pay special dividends in anticipation of the potential higher taxes. that's thinking first of your share shoeld holders and i thin companies that do that as we see them rewarded for doing that, it will encourage other companies to do the same. >> how would you play this if you try to find a company that might be a logical candidate to join in. one suggestion was look for companies where family members of the founder from years ago may have an interest in collecting dividends and an
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interest in avoiding tax. is there a broader play here? >> well, you know, you have to pay a dividend to begin with and consistent and growing over time. i think the family thing is very much true. insider ownership is true. i think the capacity to pay a higher dividend. so somebody has a low payout ratio, talk about the 30% and 40% is probably a sweet spot. yeah, i think of a company like nordstrom's as a good example of family ownership, good, consistent dividend growth and reasonable payout ratio might be a way to play it. also broad dividend based etfs, which if you like the trend as a whole, that's another way to do it. i would caution against one thing, carl, and that would be going out there and buying utilities, telecoms or high dividend stocks already. they do not have the capacity to raise dividends significantly. >> yeah. if anything they might be in danger, depending on how some regulatory concerns go forward
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regarding utilities. is there any sense, doug, that they are borrowing from tomorrow to pay investors today? does a special dividend now mean a hike next year is less likely and you might see a div clairt on? >> probably. if you pay a special this year you take it away from next year. in the end if a company has a reasonable payout ratio and, you know, maybe they don't raise it 15% next year, they raise it 10%, i think investors will still appreciate that. one thing we haven't seen, by the way, is the companies that grow dividends have not seen a valuation multiple expansion because of the bush tax cuts in 2003. this whole thing that the dividend stocks will suffer next year if we see higher dividend taxes, it's just not true. there are some that might, utilities and telecoms, but the average dividend stock has not incorporated a higher valuation than in '03. >> that's interesting. finally, they're doing this to
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avoid a change in policy, which we do not know yet if that will actually happen. do you think it will? are these companies going to look smart, or is it going to be moot if, in fact, we get some compromise? >> i think you'll see a compromise. i think it's in nobody's best interests as your previous guest mentioned to go over the cliff. in the end you may see higher dividend taxes. i don't think they'll go back to ordinary income rates, but they're probably likely. >> doug, good stuff. definitely a wrinkle you don't see every day. today we got a big one out of las vegas sands. that's again. >> thanks, carl. >> some small retailers getting a bid today. courteney regan is back with details. >> why buy a diamond ring where you can buy the whole up company. they could be taken private by apolo. that helps shares of a number of
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retailers. signet is getting a bullish call at an investor conference in london last week. remember, it's the holidays. it's a big-time of year for folks to get engaged. carl, back to you. >> that is true. a lot of engagements around the holiday. rick santelli with a tuesday edition of the santelli exchange. good morning. >> good morning, carl. we have sheila bair in about 15 minutes, and we're going to talk about this topic with sheila as well, because she used to be head of the fdic, another guarantee we have in the system. i'm not questioning whether we should have the federal government guarantee things, but the list is long and growing. it may not shrink when it's supposed to. what am i referring to? tag, you're it. yes, you, the taxpayer are it again for guarantee. the story is not bad, but many traders have talked about this for a long time because they also own businesses. tagging the taxpayer. transaction account guarantee is
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what t.a.g. stands for. what it is, we have our accounts guaranteed to the tune of 250 grand, deposit insurance. remember, sheila bair is coming up. but for noninterest bearing accounts by business, municipalities, corporations, they in 2008 during the crisis were given a blank check guarantee. no maximum amount. dodd-frank extended it. it's supposed to expire at the end of the year with a lot of other issues known as the fiscal cliff. we know something about that. this one shouldn't expire. here's some of the quotes in the op-ed i find interesting. can we show them on the screen? taxpayers now stand behind close to $1.5 trillion of t.a.g. deposits. beltway programs have a bad habit of becoming permanent threats to the taxpayer, and that gets into the crux of the matter. there's a lot of talk about grover norquist's pledge and some say maybe they'll go
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against their pledge, which is no surprise to me. our government has had a lot of pledges. aa pledge is basically a promise. there's been a lot, a litany, a long list of, well, promises that have been broken. if promises were broken for a reason, maybe one time like we have sunset rules on programs like this, or we need super majorities to change the tax code, maybe that is a promise broken that voters may understand. i don't know that they will because in the end, as the op-ed, another op-ed showed in "the journal" today the pledge isn't really about grover norquist but you the voters. you voted for people that made a promise to you. that's what you voted for. it has nothing to do with grover norquist. it has to do with our word. remember, with this program t.a.g. is takes away our freedom, because good institutions that need to draw business from business don't
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need to do that anymore. if there's a government guarantee, it lowers the liberty and the choices for all. back to you, carl. >> all right. rick, something to think about. talk to you in a few moments. can't wait for sheila bair with you in a few minutes. we're heading to ohio's 8th district, home of john boehner. do his constituents think they're being faithfully represented. is he rising above as some say? why men might be the new women when it comes to retail. we have the controversial piece when "squawk on the street" comes back. n you take a closer . the best schools in the world... see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... they can inspire our students.
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want to show you a live shot of tahrir square in cairo that is packed with protestors, of course. he's trying to take on near absolute power, allowing him to legislate by decree. basically very little court oversight. he tried to walk some back, but it remains very contentious and one of the big puzzles for foreign policy at the white house. we're taking rise above on the road. are the elected representatives responsible for reaching aa deal on the fiscal cliff really speaking for their constituents? john harwood kicks it off with a visit to speaker boehner's home state of ohio. good morning. >> good morning, carl. here in the capital the fiscal cliff is an abstract policy
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debate, but in john boehner's district a tip into the recession would cause real economic pain. they've been working back economically from the long-term loss of manufacturing jobs and troubles in the auto industry. the last thing this area needs now is another economic setback from the fiscal cliff. house speaker boehner and hez colleagues in the congressional leadership have sounded con sill to her notes about their prospects. that sounds like good news in middletown but only up to a point. >> i want to be confident and optimistic, but no i'd rather be reserved at this point. >> reporter: one of the constituents has a petroleum distribution business that like ohio's economy is doing well. he's known boehner for years and believes the speaker wants to make a deal with president obama to avoid the fiscal cliff, but he's seen washington's dysfunction and has his doubts. >> he's somewhat just like the
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president. it's time to do ahead and do your job. >> speaker boehner is secure enough in his own district that his constituents will give him a free hand to negotiate. his bigger challenge is pulling together republicans from districts across the country behind any deal he ultimately strikes with president obama. >> carl, that's not just john boehner's job. it's also the job of eric cantor, the majority leader the on the democratic seed, harry reid and chuck schumer have to pull their flock behind any potential deal struck. that's not easy getting 60 votes the in the senate and the majority of the house. >> rangling cats on both sides, john. the president meeting with business executives at the white house, going to pennsylvania this week to visit a small business. all theater, or is there something bigger going on? >> he's trying to put pressure on the congress and generate more stakeholders. he's had a series of meetings. yesterday, tom donahue and jim
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engler were at the white house meeting with chief of staff jack lieu and other certain officials. the president is putting out a public message. he just won the election and he's trying to leverage that victory. it's not easy. he and john boehner got close in 2011, and we'll see if they can do it this time. >> it's a nice piece of tape. straight ahead former fdic chair sheila bair talks about the cliff to bailouts to the fcc. later on, how suit sales are changing the face of retail. we'll find out why men are becoming the new target for retailers around all around the world. here's a sector breakdown. utilities and consumer staples leading the way today. energy and telecom doing the worst. dow is down almost 34. back in a minute. if you are one of the millions of men
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want to get to rick santelli to introduce a guest who needs no introduction, but i'm sure we'll get one anyway, right, rick? >> absolutely. sheila bair and the author of a book -- only way i can describe it is her book "bull by the horns" gets a four tea bag rating from myself because it's steeped in honesty. yes, it is steeped in honesty, and we're going to get to the book in a minute. welcome, sheila bair. >> thank you. happy to be here. >> it's an honor to have you. let's start at athe beginning. i just did a piece on t.a.g., transaction account guarantee. as head of the fdic we just about guarantee everything. you weighed in heavily on money market funds and you how the
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government should get involved. do we need all the guarantees? do the taxpayers need to stand behind these huge institutions or corporations or municipalities? isn't enough enough? what are your thoughts? >> i think we need to reduce the safety net. we need to be exiting these programs. t.a.g. needs to be -- i would support a transition, but t.a.g. needs to end. these subsidies in the housing market, the gses are guaranteeing over 90% of new originations right now. we're in way too deep for a country all about capitalism and markets and using markets to allocate resources, the government is far too intrusive right now into those market mechanisms. >> now, as i look up on the board, being that the cme with treasury futures, of course, i see a 165 ten-year and a 279 third-year. would you lend your money to uncle sam for ten years for an interest rate of 1.65%? honest question. what's your answer? >> i don't think -- i think we're in a big bond bubble.
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i don't think the fundamentals support those rates of return not anywhere close. congress is still struggling to come up with a long-term fiscal package. it's frightening that we have not seen better action out of the congress. so those chickens will come home to roost at some point. i hope we have a few years before it happens. the fundamentals don't support the low rates of return. >> that's why i asked the question. i know that's your stand. i'll take it a step farther. do you think ben bernanke's strategy of massaging rates and that's one heck of a massage down to these levels through the ownership of a significant portion of marketable treasuries, do you think that's a good idea? >> no, i don't. i really wish the fed would stand down and let the market bump the rates up a little bit. i don't know what the exit strategy is on this. they keep buying and buying and now it looks like we have a near 0% interest rate policy for as far as the eye can see. i don't know how we get out of
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that, and it does frighten me because we hadvy accommodating monetary policy prior to the subprime crisis. that fueled the subprime investments, and i figure we have a new asset. this time it's bonds and not housing. we went through the dot comes too. we need real structural reforms to our economy and we need our entitlement spending under control. those are the things the president and congress have to do. the fed can't do it. >> it sounds a bit argentinian, doesn't it? now "bull by the horns." terrific job. you called tim geithner bailouter in chief. yesterday in the papers i notice the administration picked bail outer in chief to be the head negotiator for the white house on the fiscal cliff. the irony of it all. would he be your first choice? is he going to get the job done? >> actually, i wrote a column
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recently suggesting this might be a nixon to china moment for secretary geithner that he could perhaps more aggressively engage the wall street community to ante up more. they want fiscal responsibility. they're right. we need it for long-term stable financial systems. we need fiscal responsibility in washington, but their ways like getting rid of preferences for investment income, there are ways to perhaps ante up. i hope tim views this as a moment to dispel critics like myself and engage them and come up with a plan that makes sure they share a little bit of the pain, too. >> you're being much kinder than i would be. the feeling i had in your book is that this man is not ingenuous to what he says. bailouts, in your opinion, you said, you know, he should have been trying -- mr. bail outer should have tried to protect citi from you, but in essence is he forced citi on the taxpayers
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protecting citi. >> right. >> if all the headlines of the day were that that group headed by mr. paulson were trying to protect main street, that is not true. why put him in charge? >> i think the way he viewed it was you helped citi, you help main street. it didn't work that way. i disagree with that. i don't know. i'm not going to go back and do the he said and she said type of thing. >> i will. >> you will. i think as i said repeatedly, i think he did what he thought was right, but he has a wall street centric you view of the world. i think he thought helping the big financial institutions that that was going to the broader economy, and it just didn't work out that. >> no. bad strategy. >> no, it did not. it did not. >> listen, my final question. after reading your book, i don't think there's a person on the planet more qualified to replace bailouter in general, mr. geithner. if offered to you, and i know
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there isn't a chance there would be because you'd do the job well, would you ever accept being treasury secretary under this administration if offered to you? >> i think that's a job under any administration that if the duty called, obviously anyone in their right mind would accept. i'm not looking for it and certainly not accepting it. that's why i wrote the book. i want to be honest and want people to understand the issues. i hope this administration in the second term will start, you know, having a new direction more main street friendly. >> honesty in politics. my hats off to you, sheila bair. carl, back to you. >> i'm looking at a twitter feed right now that says sheila bair for president. bell is about to sound all acro across current. we'll have the impact from the states in two and a half minutes.
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stirchl the european markets are closing now. >> what a day for greece and even the states as we look at what they've done. >> this is a very, very important day. look at the market action. it's not huge. let's remember where we've come. let's understand what's been said today. in the summer there was a great deal of talk that greece would be kicked out of the euro zone or at least default. neither have happened. as a result of this deal that came through last night in brussels, 1:30 a.m. as they spoke into the wee small hours, we have a deal for greece which
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there are substantial wealth transfers to athens to bring that debt down. it's not sustainable overall, but the imf pushed everybody else towards sustainability. the greek president on tv declared it was a new day. there are going to be problems. the most immediate of those moving forward is that they now have to go through a debt buy-back finance by the rest of europe. we're not quite sure how that will go. the idea is they will buy back greek debt 30 sents on the dollar. they want to pay the price no higher than they had back in november 23rd. you see, the yields have come down, so the market has rallied since then. that may be a problem moving forward. if you look at the greek banks today, they have taken a hit as a result of this because that write-down is greater tha perhaps many had anticipated in the market. they're sitting on 11 billion euros of debt as you probably know. now, while i say remember the context, okay, the move today, the relief rally is not great,
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but where have we come from? look where we are on the asc and on the greek stock market over the last three months. through the summer it became obvious they did the deals for greece. we're up 30%, and if you look at europe overall in the period of time, the dow jones euro stocks shift similarly. you see it has made some gains during that process. it's actually stock below a long-term resistance line here, which we keep bouncing up against. it can't make further gains. the bond markets have rallied again in europe today. look at where we are the on the spanish ten-year, and they again as a result of easing tensions and greece is part of it, they can off-load $4 billion euro of further debt. the yields are down again here. two-year yields in italy today fell to a level we've not had for more than two years, and that's the era they might buy bonds. you have this satisfaction until the markets and they have done
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the deal and that europe has succeeded in the promises or expectations built up out of the summer. >> even though the euros did sell off a bit, you think the action in the spanish bond market is the more important obvious? >> i think it's the more obviously barometer of what is going on the feeling. that's a definition of play on europe versus america versus everything else. let me show you where we are on the banks. they rallied today. that's worth pointing out. it's not a huge rally. we had an upgrade from ubs today. that's why they're high. it points to generallily easily tensions. i'll show you one more stock if i may. reported stocks today. that is the point. it is the -- it is precisely cognac doing the big for them. their stock is up again today. >> between them and diaggio, spirits are having a good year. >> oh, yeah. >> thanks, simon. in egypt mass protests are
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planned from the muslim brotherhood and opponents in cairo today over the decree giving new powers to morsi. ayman is live in cairo with the latest. good evening. >> reporter: good evening. tens of thousands of protestors have gathered in tahrir square. many of them saying and singing the same songs and chants in the revolution. they changed the name from mubarak to morsi. the demands are the same. many people behind me today have been galvanized by the degree cree of morsi that gave him sweeping powers, including those to legislate without judicial review. it's not just about the decree. they're disappointed with the pace of reform. they're disappointed with the new constitutional assembly writing a constitution. they say it's not pluralistic and does not represent all of egyptians, and more importantly they're angered by the police force in egypt still using the same brutal tactics they used
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under mubarak. there have been no reforms and no convictions of officers that killed protestors. they're coming out in large numbers behind me. that has galvanized them and even unifying them politically. president morsi and his muslim brotherhood enjoy a great deal of popularity. they won in parliament and the predzy, however, they have refrained from participating today. late last night they canceled their protest to avoid confrontations or clashes with the protestors behind me to avoid of dip of fighting over the past six days and various cities across egypt. >> just a remarkable scene there. we can barely hear you over the noise from the protestors. thanks so much. bob is looking at what's moving at the big board. >> overall negative action. >> i think we're even on the advance decline line. everyone here still believes a deal on the cliff is coming, and you better not disappoint up.
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we hit the bottom two days after the re-election. it's straight up since there are sideway moves, and that's a belief that the deal is possible. there's all sorts of plans floating around, but one with a lot of traction on the floor is bob corcoran's plan that talks about medicare and medicaid and sober security. cochran is proposing less generous for social security and increases in the age and medicare eligibility to 65. it's 65 right now. that's pretty aggressive and ambitious on the move on here and i'll show you the revenue increases sides. capping itemized deductions at 50,000 will hurt the wealthy. that's an interesting proposal, and higher medicare premiums for the wealthier. a means test. this is not a whittling thing to do. this is tackling some of the big issues, and i give the guy a lot of credit for that.
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i don't think it's necessarily going anywhere. it's controversial. at least somebody is thinking of a grand bargain and what it might look like to tackle it and not just kick the can down the road to 2013. kudos to senator cochran. did you stee this greek debt deal? it is staggering. we're looking at greek debt at the lowest level since august 2011 or so. look how low it's going here. this is the ten-year. remember the terms of this deal today that they had. extension of the loans for 15 years, deferred interest payments for ten years. no interest payments for ten years. think about that if you have a mortgage no interest payments in ten years and reduction in the interest rates. they're setting up down the road for them to be able to forgive debt. they can't do it yet, but they're moving in the direction. one little sign of concern here in the global markets, carl. china. again, we're at a new three and a half year low today. a lot of people are hoping for the banks to get out and start
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lending. there's concerns about higher capital requirements for the banks over there, but they're not right now. that's a little bit of a disappointment. a lot of people hope once we got the need leadership in china to come in we would see some plans for more aggressive stimulus, more bank lending. so far it's been deadly quiet. >> some say these guys are not reformers this round. i like how a couple weeks ago you said on this show the mortgage interest deduction was probably toast in some fashion. >> i think you see more -- this is going to be part of any part of grand bargain. you don't eliminate it, buttle you will whittle it down a little, like deductions is whittled down for self-employed people. >> you had it first, bob. talk to you in a bit. over to courteney regan for a quick market flash. >> look at the disk driver makers including dell, western digit and c gate. many of them lower. c gate is the biggest loser in the s&p 500. a couple of factors at play here. insider selling at c gate
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selling more th57,000 shares of company. a note from cls citing general weakness in the pc area which we've been talking about. it seems to be weighing on some stocks today. carl. >> see you in a little while. thank you. three years after ford motor company sold the jaguar and land recovery brands to tata motors, we see sales rebound in the u.s. phil is with the president of jaguar and land rover for a sneak peek at the new models. hey, phil. >> i'm joined by andy goss whoz the president in the united states. we'll talk about the business in a little bit. i'm sure people are saying what's this back here? this is the all new 2013 range rover that comes out mi mid-december? >> december 13th is the global launch market for the car. this is the fourth generation range rover from 1970. it's actually 700 pounds
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lighter. >> that's a lot of weight. >> it will have better fuel economy and also better strength but very refined car as well. >> you introduce it here in l.a. a, southern california. a huge market. people are going to say how much does it cost? $130,000 for this vehicle? >> starting at $83,500. this one is $130,000, yes. i have to say people will clamor for the car. >> this brings up the question. the average land rover customer, household income of $515,000, $130,000 vehicle. this brings up the question with all the talk about potentially raising taxes on the wealthy here in the united states, would that hurt your business? would you sell fewer range rovers if the tax rate went up for those making more than $250,000? >> i think at the moment we see no sign of that quite frankly. a deal has to be done. our customers buy smartly, and when they look at vehicles like
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this, which is new on the block, they're going to go for this particular car. they might compromise on other things and not on new range rovers. we're confident we can sell more than all the cars in the u.s. without a shadow of a doubt. >> real quick. christmastime is the time of year when luxury seams go through the roof. why is that here in the united states? you're expecting a big december. >> we're expecting an enormous december with new cars like this and the jaguar f type getting interest as well. i think it's institutionalized. we create a big december. the martin, the lease payments and whole industry gets behind the market. from thanksgiving onwards it really generates a big car market. >> andy goss, president of jaguar and land rover in the united states. sales this year up 18% for land rover here in the u.s. this goes on sale mid-december. carl. >> all right, phil. enjoy l.a. we'll see you in a little bit. senator dick durbin a member of the boles-simpson commission and the so-called gang of eight lag out the progressive case for a
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bipartisan fiscal cliff deal. we'll bring you headlines as they happen. when we come back, men have a rep utation for hagting to shop. we'll tell you why they say men are the new women. back here after a break. suffer n 2 or more days a week, why use temporary treatments when you can prevent the acid that's causing it with prevacid24hr. with one pill prevacid24hr works at the source to prevent the acid that causes frequent heartburn all day and all night. and with new prevacid24hr perks, you can earn rewards from dinner deals to music downloads for purchasing prevacid24hr. prevent acid all day and all night for 24 hours with prevacid24hr. prevent acid all day and all night for 24 hours if we want to improve our schools... ... what should we invest in? maybe new buildings? what about updated equipment?
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coming up on halftime, facebook soars 35% in three months. is the turn-around finally here? research in motion down today, but up about 50% in a month. buy or bail on this battleground stock? our traders debate that, and getting ahead of the fiscal cliff. who will be the next to issue a special dividend? find out at the top of the hour. carl, see you in about 15. >> thanks a lot. when it comes to shopping, most men admit it's not their favorite thing to do. guilty. surprisingly men's wear sales are surging at double rates to women's sales which were basically flat. jim, always good to see you. welcome back. >> good to see you, carl. thank you. >> what is the author of "den of thieves" writing about fashion?
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>> it was thanksgiving weekend. i've noticed this trend for over a year. why are men out there buying suits, suits and sports jackets. i went on a little expedition, and i stopped in at the ludlow shop and j. crew and sacs fifth avenue. there's two trends here. the children the baby boom have rediscovered the sharp look and want to wear suits and a wanton generation change in the profile of men's suit away from pleated, baggy, drapy cover it all up looks of the '80s into this sharper and much leaner and shows off the physique more and slimmer look. they're driving sales. here i am. i fell right into the trap. i he looked in my closet and thought, oh, my god, what are these suits doing in here? >> you talked to mickey drexler,
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who says this is our version of the iphone, meaning the slim suit. no coincidence he's on the board of apple. this is real money, jim here. does it lead you to a specific trade? >> it's about $100 billion market. if you want to see where mickey drexler is known as a brilliant retailer, walk into this new ludlow's store, there's so much up happening it. it's cleaver and very, very well executed. there are a lot of public traded companies here, and i think what you see is the trend shifted from the small group of very fashion conscious young people to the mainstream, frankly people like me who realize if you want to look recently up to date you have to spend money and change the look of the wardrobe. >> it coincides with the call out of goldman today on consumer discretionary where they recommend names like crocs and deckers in part of what the stickiness of the male consumer. they're looking for names more exposed to men than women.
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it's a little far afield from what you you talk about, but not too much. >> it's very true there's a lot of strength in men because of the shift in fashion and the recession and job market may have felt the pressure to look good and enhance prospects but succeed in the jobs they're doing. there's a new focus on career and looking good. that whole idea of dressing up and putting on a pair of khakis is not cutting in today's more competitive market. people have to spend. >> finally, jim, we got good consumer confidence numbers out today. we've been having a -- in terms of the idea, the psyche of a consumer that shops. we wonder whether or not you think most consumers are aware what the fiscal cliff is. even if they do, if that's weighing on their appetite to spend? what do you think? >> they've got to be aware of it. the fiscal cliff is the y2k of 2000. it's the big gorilla in the room. i hope like y2k it will be a nonevent because something will up happen in washington. i think people are aware of it.
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i don't think if they've got the money i don't think it's preventing them from spending. i think it's more of a problem on the investment side, the stock market. i think consumer spending is looking fairly good. christmas sales were at least initial initially reasonably strong. the fact they have more confidence is translating, and men into going out and ptding to look good and keep a competitive edge in a tough market. >> when i see a piece by you in "vogue" next month, i'll know you turned. thank you. have you wondered if the city you live in is good for your portfol portfolio? we have. we'll give you the best city for stocks after the break. pizza! [ garth ] olaf's small business earns 2% cash back on every purchase, every day! helium delivery. put it on my spark card! [ pop! ] [ garth ] why settle for less? great businesses deserve great rewards!
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the battle between hewlett-packard and the former leaders of autonomy took a new turn. >> the war of words between dr. lynch, the co-founder, and former ceo of autonomy and the manager of hp took it up a notch. i believe hp is getting a look at this. we have no real response at this point. says any number of things. it's a very long letter in which he says it was shocking that hp put nonspecific but highly
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damaging allegations into the public domain without prior notification or contact with me as the former ceo. of course, hp has countered that by saying we had a meeting with him last june where we asked him a lot of questions. he said hp should provide me with the interim report and any other documents that you say you provided to the s.e.c., and of course the serious fraud office in the uk so i can answer what's alleged instead of selective disclosure. much of this letter, in fact, almost a design to have the media ask questions of hp perhaps that dr. lynch doesn't feel are answered by the company. he asked them to explain how they claim a $5 billion write-down. he fails to understand how they reach that number. please publish the calculations used to determine the 5 billion, says dr. lynch. i want to understand the breakdown of it relative to the contrion o revenue that conceivably came from these
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fraudulent my word but these allegations. the alleged mischaracterization of hardware and inappropriate accelerate of revenue recognition he wants the details on and the allegations of incorrect revenue of hosted deals he want or asks at least for specifics on and goes on from that to really -- he's been saying this already. to basically say how can hp say the write-down was or should be attributed to hp's operational and financial mismanagement of the company. that seems to be the heart of his argument. taking a step back, carl, it's rare to see somebody on the public stage like this when there are at least charges and allegations of this level of seriousness that have gone to the s.e.c. he's being nothing but outspoken in defending himself. >> it's almost the opposite of lawyering up as we like to see. as we talked about during the break, if this is somehow a bluff, it's a bluff with a lot of commitment behind it, is it not? >> it certainly is.
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he must be quite confident. i don't know what his lawyers are telling him, but having womany lawyers in situations like this, i cannot imagine they're saying, oh, yeah, go out there and say as much as you possibly can. we know down the road that can come back to haunt people, but in this case dr. lynch feels he's in the right and he's very, very vociferously defending his reputation asking more and more questions, of course. meg whitman, current ceo of the company were aware of the hard wear sales between 2012. did they continue to sell third-party hardware of value after the acquisition? he goes on and on. we'll see whether we get aanswers to some of these questions, but it's a public campaign, perhaps one not expected by hp when they originally came with these allegations. >> i don't want to use the term pandora's box, but there's a box of some kind being opened. you have to imagine, david, they have data and records of their
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discovery over these six months. is it possible that that does get leaked or released or disclosed? >> it's a good question. i asked it in my own reporting on this, of course, and yes, it is my belief there's that kind of evidence. i think at this point with this continued public pressure from dr. lynch we'll see whether any of it does make its way into the public realm. of course, that evidence has been turned over to the regulatory authorities who are conducting their own investigation. >> new chapter, it seems like there's a new one every day. thank you very much, david faber here. a the lot more on the breaking hp news and a lot more on the general markets. the dow almost recovering its losses. back in a minute. well, in that time there've been some good days. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. like the transatlantic cable that connected continents. and the panama canal that made our world a smaller place.
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prevent acid all day and all night for 24 hours with prevacid24hr. you saw david faber bring us this news of this letter to hp. we want to bring in john ford to react on the news. when you think the drama can't be elevated anymore at this company, it keeps going. >> yeah, carl. i cease to think there's any limit to the potential drama here. one of the things that jumped at me and you guys covered this well, of course. the number of questions that mike lynch raises in this letter. if the hope on hp's part was


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